In re Lamont
487 B.R. 488
N.D. Ill.2012Background
- Appellant Lyubomir Alexandrov purchased delinquent real estate taxes on 800 Grant Drive, Minooka, Illinois, and received a certificate of purchase.
- Tax sale occurred before the landowner Debtor filed bankruptcy; redemption period remained in effect until the period expired.
- Debtors filed voluntary Chapter 13 on December 3, 2008; Plan was confirmed February 12, 2009 and did not provide payments to Alexandrov but listed Grundy County as secured creditor for delinquent taxes.
- Alexandrov moved to modify the automatic stay on January 26, 2012; Debtors responded February 10, 2012, and the bankruptcy judge orally denied the motion February 17, 2012.
- Appellant contends he was not properly noticed and seeks relief to obtain a tax deed; the district court reviews the bankruptcy court’s legal conclusions de novo and affirms denial of modification.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the tax purchaser holds a provable bankruptcy claim after a tax sale | Alexandrov argues the tax purchaser has a right to payment (a claim) under §101(5)(A). | LaMonts argue there is no claim against the debtor in bankruptcy after a tax sale. | Yes; the court holds Alexandrov has a bankruptcy claim. |
| How the tax purchaser's claim should be treated in Chapter 13 | Alexandrov seeks modification of the secured claim to be paid through the plan. | Plan treatment should follow §1322(b)(2) and §1325(a)(5) with lien preservation. | The court permits treatment as a secured claim under Chapter 13 and denies modification of stay. |
| Applicability of the automatic stay to tax-deed proceedings before a tax deed is issued | Some argue stay does not apply or that relief from stay is readily available after redemption. | Debtor's rights remain protected under the plan; stay could be lifted for cause in some views. | Modification of the stay is not appropriate while redemption period has not expired and plan provides security for the lien. |
| Whether lack of notice to Alexandrov invalidates the Chapter 13 plan as to his interests | Lack of notice means he was not afforded an opportunity to object; plan should not bind him. | Notice issues are unclear but lien protection and sale-in-error remedies remain available despite notice gaps. | No reversal; plan adequately protects his lien and remedies remain available. |
Key Cases Cited
- In re Bates, 270 B.R. 455 (Bankr.N.D.Ill.2001) (tax purchaser holds a claim and can be treated as secured in bankruptcy)
- In re Kasco, 378 B.R. 207 (Bankr.N.D.Ill.2007) (supports treating tax purchaser’s claim in Chapter 13)
- In re Tynan, 773 F.2d 177 (7th Cir.1985) (limits of §108(b) in mortgage foreclosure; not controlling for tax sales)
- In re Murray, 276 B.R. 869 (Bankr.N.D.Ill.2002) (discusses §1322(b)(5) and interaction with §108(b))
- In re Blue, 247 B.R. 748 (Bankr.N.D.Ill.2000) (no direct creditor-debtor relationship; debated claim status)
- In re Udell, 18 F.3d 403 (7th Cir.1994) (alternative remedies as indicating a claim exists)
- Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552 (Supreme Court, 1990) (broad definition of 'claim' in bankruptcy context)